Rate Relief for Canadians:
The Latest BoC Announcement

This week, our guest writer is Alec Bowes- owner and partner at Indi Mortgage (The Independent Mortgage Company). Born and raised in Kingston ON, Alec made the move to Guelph in 2002 and graduated from the University of Guelph in 2006 with his Bcomm. He now lives with his beautiful wife Jess, and their 3 children Jack, Penny and Sam.

Indi Mortgage, our valued local mortgage partner, is committed to offering clients expert and professional service. They are also deeply involved in our community, sponsoring local events like "Trees for Tots" and "The Frosty Mug”.

As a 22-year resident of Guelph and a trusted mortgage expert with 19 years in the industry, Alec Bowes is here to provide insights on the recent Bank of Canada rate cut and its impact on the real estate market.

Without further ado, read on!

On July 24th, the Bank of Canada (BoC) lowered the overnight rate to 4.50%, offering a bit more relief to Canadian consumers suffering under the weight of high mortgage rates and other borrowing costs. This puts us back to what the rate was in June 2023 and brings the PRIME rate down to 6.7%.

The BoC’s Governing Council noted that excess supply in the Canadian economy has aided in slowing inflation in recent months, warranting looser monetary policy as the Canadian labor market has shown signs of moderation.

Another critical data announcement today: manufacturing sales in Canada plummeted by -2.6%. The previous reading was +0.4%.

WHAT DOES THIS MEAN?

The bond market, which controls fixed rates, had already priced in three BoC rate cuts in 2024, so the fixed rates we see today are relatively unchanged.

With the bond market hovering around 3.3% and fixed rates hovering around 4.99%, there is a margin that the banks are currently enjoying. Some of that is risk-based pricing with defaults being up, but all it will take is one major player to reduce rates further in an attempt to scoop up market share, and the others will be forced to follow. This will no doubt spur activity in the real estate market. A savvy buyer should take proactive steps by securing a pre-approval and assembling their real estate team now. This approach allows for adjustments to the rate up to five days prior to closing. Some buyers may hesitate to get pre-approved before rate drops, mistakenly believing the rate drops won't apply to them. However, obtaining pre-approval today ensures you know your rate ceiling.

It is expected we will get at least one more rate drop in the fall. If we get two, fixed rates will come down, no question. As a reminder, we can always apply a rate drop right up until five days prior to closing.

The BoC has three more scheduled announcement dates in 2024: September 4th, October 23rd, and December 11th.

With 19 years of experience, my professional opinion is that it is safe to say rates are finally heading in the right direction, and based on the most recent announcement from the Bank of Canada, we now know what we can expect moving forward. Having a proper strategy in place with your mortgage options has never been more important.

-Alec Bowes, Indi Mortgage

For expert advice on how the recent rate changes could impact your mortgage, reach out to Alec’s team at 1-877-341-1299.

With their extensive experience and dedication to client success, Alec and his associates are well-equipped to help you navigate these shifts and optimize your home financing strategy.

Thanks for reading & and I hope you enjoyed this week’s guest speaker.

Have a great weekend,

Paul

Appointment Calendar: https://calendly.com/homegrouprealty

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